Statistics show that vacation rental revenue is booming and is expected to generate $18 billion in 2018. Even better, the projected annual growth rate in the sector through 2022 is 6.6 percent.
If you have a seasonal home or investment property that you plan to retire to, you may be considering turning it into a vacation rental. We’ve teased out the most frequently asked questions about renting to vacationers.
1. Why Should I Rent Out My Vacation Home?
People rent homes out for many reasons, including ensuring someone is enjoying the property when you aren’t and generating cash flow to cover the mortgage and expenses.
2. How Do I Know If It’s Worth the Risk?
If your monthly mortgage is less than one week of peak rental season, and you rent your property 17 weeks a year, you should at least break even.
For most destinations, there are 12 peak weeks for vacation rentals, which is just enough to pay your annual mortgage. Utilities, association dues and other costs are covered by approximately five weeks of off-peak rentals. Everything beyond that is profit.
3. What Do the Websites Do?
The major websites include VRBO.com, Airbnb.com and HomeAway.com, and this is where you typically market your property so that travelers see it. Each site has its own services that might include online marketing, booking tools and the ability to process credit cards.
4. Should I Manage the Rentals or Hire a Property Manager?
Consider managing your vacation rental on your own if:
- You like do-it-yourself projects
- You prefer complete control over your rentals
- You don’t want to pay commissions to a property manager
If you choose to manage the property on your own, you must manage a cleaning and maintenance crew and hire an accountant and lawyer.
On the bright side, managing your rental gives you a higher financial return. Also, you can get help from HomeAway, VRBO, Airbnb and other sites in regard to setting up online bookings, emails and calendars.
5. How Do I Target Travelers?
Travelers use four areas to search for vacation rentals. Your ads and marketing should address each of these factors.
- Location and Proximity to Attractions: Write a description that highlights local attractions. Instead of writing “close to the local attractions,” be specific. For example, “within walking distance of the Alamo,” or “four miles from Disney World.”
- Price: Don’t waste people’s time if you’re outside their budget. State your prices clearly in listings.
- Size of Property: You can list square footage, but this isn’t a sales listing. Guests want to know the number of bedrooms, bed setups and the maximum dining and sleeping capacity.
- Preferred Dates: Keep your availability calendar current to accommodate busy families scheduling vacations around school or work breaks.
6. How Much Should I Spend on Marketing?
The real answer is as specific as your budget. Spend as much as you can. However, prioritize your spending to make the biggest impact. Your marketing starts with an amazing first photo and enticing shots of every room in your rental.
People choose your home over others based on photos more than any other factor, including price.
7. Do I Need a Welcome Package?
Unless you can meet guests personally, a keyless entry system is crucial. It lets you avoid the dangers (and potential expenses) associated with leaving hidden keys on the property. It’s also easy to reset keyless entry systems, so you can change codes for new guests — a security detail that is sure to resonate with potential renters.
Your welcome package can be delivered via email if you must send it remotely. Include information on where to find towels and tableware, and include instruction regarding the Wi-Fi connection, cable package and other entertainment option.
It’s worth noting that vacationers expect a hotel-like experience commensurate with the price they are paying. Hi-speed internet and premium cable packages are recommended. If you have a pool, hot tub or other luxury items, clearly state what’s available versus off limits. At a minimum, provide board games, toiletries and cleaning products.
8. What Legal and Tax Requirements Can I Expect?
Your city, county or state may require you to register your rental or obtain a business license. Expect to pay hotel or resort taxes, especially if you live in a tourist area. Familiarize yourself with the local regulations that impact housing rentals. If you have an attorney, seek his or her advice on what ‘s expected of you.
9. How Can I Protect My Property?
Get a feel for your renter by talking to them on the phone. Create an application that includes their name, address and phone number so that you can do a background search. You should also create a rental agreement that details your policy on pets, children, smoking and other factors.
Protect your property proactively whether someone is on site or not with remote access controls and real-time alerts. The entire point of seasonal properties is that you might not have someone there at all times, but the right technology lets you track access to the home and provides peace-of-mind that nothing urgent is occurring when you’re away.